NASHVILLE (AP) — Republican Gov. Bill Lee's top priorities in his latest spending plan would boost K-12 teach pay, extend postpartum health insurance for Tennessee's low-income women, encourage employers to hire more former inmates and more.

Lee's second annual address to the Republican-controlled House and Senate outlined a $40.8 billion financial blueprint for the upcoming fiscal year, a 3.7% increase over the current budget year and the first time Tennessee's budget has climbed past $40 billion. Lee's proposal would slash $91.5 million in recurring funds, resulting in a cut of 191 positions, none of which are currently filled.

EDUCATION

— $117.4 million for teacher pay increases from $36,000 a year to $40,000 over the next two years.

— $70 million for improving literacy rates.

— $12 million recurring and $12 million nonrecurring to help charter schools pay for buildings and campuses.

— $25 million to fund support services at Tennessee's least performing schools.

— $46.7 million for leadership and professional development programs.

— $250 million to set up a K-12 mental health trust fund, which will not be spent until the state studies the needs of individual school districts.

CRIMINAL JUSTICE

— $10 million for salary increases for probation and parole officers.

— $44.6 million for the state to reimburse local jails for housing state felons.

HEALTH

— $6.6 million in one-time money for a pilot program to extend postpartum coverage for women on TennCare from 60 days to 12 months.

TAXES

— $40 million to cut professional privilege taxes in half for agents, broker-dealers, investment advisers, osteopathic physicians and physicians, reducing the license fee from $400 to $200 annually.

RESERVES

— $50 million more in the rainy day fund, increasing those reserves to $1.15 billion.